Iran: 1 billion euros intended for essential imports 'disappeared'

In the letter, Mahmoud Vaezi, the Iranian chief of staff, demanded an explanation about what had happened to the imports promised by those who had received the currency.

By
July 21, 2019 13:03
2 minute read.
Money changer holds U.S. dollar banknotes as he counts other currency banknotes in Tehran

Money changer holds U.S. dollar banknotes as he counts other currency banknotes at Grand Bazaar in Tehran. (photo credit: REUTERS)

One billion euros ($1.12 billion) in currency allocated for the import of medicine and essential goods has "disappeared", Iranian President Hassan Rouhani's chief of staff said in a letter to ministers of industry, agriculture and public health, according to Radio Farda.

In the letter, Mahmoud Vaezi, the Iranian chief of staff, demanded an explanation about what had happened to the imports promised by those who had received the currency.

Due to the drastic devaluation of Iranian currency in recent years, the government now allocates foreign currency at cheaper exchange rates to importers of a pre-approved list of essential goods, including medicine, food and crucial raw material. These importers are obligated to purchase and transport the approved goods into the country.

The “official” exchange rate of the Iranian rial is subsidized by the Islamic republic at a rate far above the open market rate, according to Al-Jazeera. The official rate is 42,000 rials per US dollar and is only used to import essential goods. The open market rate stood at three times as much – about 130,000 rials per dollar – in the beginning of July.

The official rate is meant to protect Iranian consumers from sudden, drastic price jumps due to sanctions.

Some individuals and companies who receive the foreign currency never import what they have agreed to, or do import the goods but then sell them at a much higher price.

Vaezi mentioned about 849 million euros allocated for importing "essential goods" and another 130 million allocated for medications, according to Qatar's daily Al Sharq.

He accused 20 companies of not importing the goods that they had legally pledged to bring into the country.

The chief of staff also sent the letter to the Central Bank of Iran and demanded legal action on the issue.

Health Minister Saeed Namaki reported that a group of ministry employees had been arrested for collusion in corruption conspiracies related to the import of medicine and medical equipment, adding that some importers had received two million euros to import heart stents, but had instead imported electrical cable and fled the country.

Earlier in July, Radio Farda reported that the Islamic republic had spent government funds intended for essential medical supplies on cigarette imports.

$170 million of the government-subsidized currency exchange rate was allocated for import of tobacco while another $16 million was allocated for cigarette paper, according to Deputy Health Minister Alireza Raisi. The subsidized rate was meant to be spent on importing essential medical supplies, according to Raisi.


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